The North American Free Trade Agreement (NAFTA) is an example of a preferential trading arrangement. Like a customs union, free trade agreements are also legal under GATT rules. Tariffs on goods traded between Canada, Mexico and The United State are eliminated. However, each country still retains its own tariff policy. The NAFTA agreement covers trade in goods, technical barriers to trade, government procurement, investment, and services. GATT and GATS are the foundation in which the details concerning the free trade agreement (FTA) are further developed.